Legal Feeds Blog

The Supreme Court of Canada will hear four wide-ranging appeals this week including one that will be of interest to counsel regarding how much of their submissions judges can use in decisions without any attribution.

Appeals/Reasons for judgment: Monica Cojocaru’s son Eric suffered brain damage during his birth at the B.C. Women’s Hospital and Health Center. Cojocaru sued the hospital and its employees, who were found liable.$4 million in damages was awarded to Cojocaru. In the ruling, the judge copied large portions of the applicants’ closing submissions without attribution. The majority of the Court of Appeal allowed the appeals and ordered a new trial. The central question is under what circumstances can a trial judge adopt and incorporate submissions of a party, without attribution, into a judgment.

Expropriation: The owner of Antrim Truck Centre applied to the Ontario Municipal Board for compensation for business damages after a new highway impeded road access to its truck stop. The board awarded damages for injurious affection. The minister of transportation appealed the order to the Divisional Court, which upheld the board’s decision, but the Court of Appeal allowed the minister’s appeal. The main question is whether the court, in applying the common law of nuisance, should require a balancing of social utility and reasonableness of the project against the property owner’s right to be compensated for interference from a public project.

Commercial law: Driver Iron and an ironwork union agreed to the terms of a time-limited collective agreement for an oilsands project. The agreement was not renewed upon expiration. Instead, the two parties entered into a new agreement that wasn’t governed by the Labour Relations Code or enforced by either party as a collective agreement under the code. The Construction Labour Relations Association complained to the Alberta Labour Relations Board about the agreement, claiming only the CLRA was allowed to directly negotiate terms and conditions for Driver Iron’s employees. The board held the CLRA was the exclusive bargaining authority on behalf of Driver Iron, which was bound by the registration collective agreements. The application for judicial review was dismissed, the appeal was granted, and the case was sent back to the board. This case questions the tribunal’s position, specifically whether it needs to state on the face of its decision the manner in which it has addressed each argument made by all parties.

Criminal law: D.J.W. was convicted of criminal negligence causing bodily harm after he tried to circumcise his four-year-old son on his kitchen floor. He was acquitted of aggravated assault and assault using a weapon. The trial judge found that in the years since his son’s birth, D.J.W. decided to “make things right with God.” The Court of Appeal granted the Crown’s appeal and dismissed D.J.W.’s appeal of his conviction. The court convicted D.J.W. of aggravated assault and assault with a weapon, and stayed the conviction for criminal negligence causing bodily harm, conditional upon the conviction for aggravated assault. At issue is whether the appeal court misapplied and misinterpreted the law regarding criminal negligence by imposing a purely objective test. There are publication bans in the case.

Teva appealed to the SCC, claiming that Pfizer did not properly disclose its invention when it obtained the patent for Viagra. The Supreme Court allowed the appeal and voided the patent, permitting Teva to launch a generic version of Viagra.

David Aitken, counsel for Teva, says through its ruling, the court has upheld the importance of the patent bargain.

“What the court has done is reaffirm the basic obligation of a patent owner to fully and correctly disclose the invention in the patent in exchange for getting a monopoly on the invention,” he says.

On behalf of a unanimous bench, Supreme Court Justice Louis LeBel wrote: “[T]he public’s right to proper disclosure was denied in this case, since the claims ended with two individually claimed compounds, thereby obscuring the true invention. The disclosure failed to state in clear terms what the invention was. Pfizer gained a benefit from the Act — exclusive monopoly rights — while withholding disclosure in spite of its disclosure obligations under the Act. As a matter of policy and sound statutory interpretation, patentees cannot be allowed to ‘game’ the system in this way.”

Aitken says Pfizer should have identified sildenafil as the effective compound to treat erectile dysfunction but instead it listed it as one of many possible compounds.

“The patent covering Viagra did not identify the fact that the compound that Pfizer had actually tested in clinical trials and found to be effective in treating [erectile dysfunction] was sildenafil,” he says.

Aitken says disclosure is essential for innovation.

“The reason why disclosure is important is because one of the purposes of the patent system is to promote innovation, and that is done in part by disclosing new and useful inventions to the public so that the public can take the benefit of those inventions for further research and development,” he says.

In the decision, LeBel referenced a ruling on patents from 1989, the SCC’s Pioneer Hi-Bred Ltd. v. Canada: “The applicant must disclose everything that is essential for the invention to function properly. To be complete, it must meet two conditions: it must describe the invention and define the way it is produced or built.

“The applicant must define the nature of the invention and describe how it is put into operation. A failure to meet the first condition would invalidate the application for ambiguity, while a failure to meet the second invalidates it for insufficiency.”

The Supreme Court of Canada will hear five appeals this week. Two of the cases ask whether Quebec courts can rectify a contract where the intention stated in the contract is different from the common intention of the parties.

Administrative law: Robert Kane was employed in Service Canada’s Department of Human Resources and Social Development in Newfoundland. As a result of changes to the Public Service Employment Act, the department was reorganized. After much shuffling around, Kane applied for the position of regional manager. He didn’t get the job and was offered a position as staff member of the IPCS Support Unit instead. Kane filed a complaint with the Public Service Staffing Tribunal, claiming abuse of authority contrary to the act. The tribunal did not find an abuse of authority. The Federal Court dismissed the application for judicial review but the Court of Appeal granted the appeal and sent the case to a different tribunal for reassessment. The main issue is whether the appeal court gave sufficient deference to the tribunal regarding the interpretation of “abuse of authority.”

Criminal law: After Christopher Baldree was arrested for various drug offences, someone called his cellphone to arrange a drug delivery. A police officer answered the call, posed as Baldree’s successor, agreed to deliver the drugs, but the delivery never took place. At trial, the Crown used the police officer’s testimony about the phone call as evidence to link Baldree to the drugs. Baldree appealed his convictions, arguing that the phone call was inadmissible. The majority of the Court of Appeal allowed the appeal and ordered a new trial. At issue is whether the phone call was hearsay and admissible into evidence, or whether the prejudicial effect of the evidence outweighed its value.

Commercial law: Professionals were consulted to draft a new contract for the planned amalgamation of Déchiquetage Mobile JR Inc. and Entreprise J.P.F. Riopel Inc. Under this contract, Christiane Archambault undertook to sell shares to the new amalgamated company, Entreprise J.P.F. Riopel. Three years later, however, Archambault received notices of assessment from the tax authorities. Riopel and Archambault brought a motion to the Superior Court to have the contract rectified, claiming that the professionals made a mistake and changed the nature of the contemplated transaction without telling them, therefore the documents they signed didn’t reflect their actual agreement. The main question is whether the Quebec courts can rectify a contract where the intention stated in the contract is different from the common intention of the parties.

This case is similar to the one above, only it involves a different company, where the main question is also whether the Quebec courts can rectify a contract where the intention stated in the contract is different from the common intention of the parties.

Criminal law: P.D.T. was convicted of sexual interference and sexual exploitation after evidence shown at trial included his videotaped confession to some sexual touching and the complainant’s testimony. P.D.T. argued that the video should not have been admitted and that the trial judge failed to apply the principles in R. v. W. (D.). The majority of the Court of Appeal dismissed his appeal. The main question is whether the verdict was unreasonable. There are publication bans in the case.

Administrative staff at McCague Borlack LLP will soon be required to scan their fingerprints when coming in and out of the office. Photo: Shutterstock

Employers are being advised not to follow the path of a Toronto law firm that will soon have some employees clocking in and out of the office by scanning their fingerprints.

“I certainly would advise employers against this course of action,” says David Doorey, a labour and employment law professor at Osgoode Hall Law School.

McCague Borlack LLP, a mid-size insurance boutique law firm, is planning to implement a new security system in a couple of weeks to track its administrative staff’s comings and goings.

It’s alleged that only secretaries and copy-room staff will be subject to the new rules and that it will not apply to lawyers, management, paralegals or law clerks.

The firm’s founding partner Howard Borlack told the Toronto Star that this new system is meant to improve building security and crack down on those who were “abusing the system.”

“We had people taking two to three hours for lunch and we had no way of knowing,” he said.

Apparently some people at the firm had complained about staff who were working less than 40 hours a week.

But the secretaries are not happy about this new policy. They’ve started a blog called “Which Finger to Give to Bay Street,” where they claim the fingerprinting system is not for security reasons at all, but that the firm seeks “greater control and ‘productivity enhancement.’”

“This is an emerging and still fluid area of employment law. Right now, we have no statute directly regulating fingerprinting in private-sector workplaces in Ontario. But the courts have been filling that void with their own common law rules,” he tells Legal Feeds.

Doorey refers to a new contractual obligation on employers to treat employees with dignity and decency, and the Ontario Court of Appeal’s ruling in January on the tort of “intrusion upon seclusion.”

“It’s not a stretch to suggest that forced fingerprinting of employees would be caught by either or both of those legal rules,” he says.

In terms of whether the fingerprinting system presents any privacy issues, Doorey says it’s more of a moral question since there is no privacy legislation in Ontario per se.

However, “there are far less intrusive ways to monitor employees than forcing them to subject their bodies to scanning technology,” he says.

John Boscariol says foreign investors need to know what the Canadian laws and requirements are for takeovers.

Clarifying the rules on foreign takeovers will help Canadian lawyers advise their overseas clients, says one investment law partner.

John Boscariol, head of McCarthy Tétrault LLP's International Trade & Investment Law Group, has numerous foreign clients looking to invest in Canada but they're unsure about the approval process.

At a minimum, they need to understand what the Canadian laws and requirements are for foreign takeovers, says Boscariol.

"Whenever you have a system that allows more government discretion [and] less explanation of what factors the government takes into account in making decisions, that creates uncertainty, [which] makes jurisdiction unattractive to foreign investors," he says.

On Monday, Prime Minister Stephen Harper promised to reveal new guidelines soon on foreign takeovers after the government's surprise move last Friday to reject Malaysian state-owned oil company Petronas' $6-billion bid to take over Progress Energy Resources Corp., one of Calgary's natural gas producers.

"Right now we're in a pretty drastic situation where there's very little to guide foreign investors. In fact, the decisions that have come out — to some foreign investors — may not be so friendly," says Boscariol.

There are other big deals in the works that the government has yet to decide on, including Chinese state-owned CNOOC Ltd.'s $15.1-billion bid for Calgary-based Nexen Inc. and U.S. energy giant Exxon Mobil Corp.'s proposal to buy Western Canada's Celtic Exploration Ltd. for $3.1 billion.

Boscariol says foreign investors need some sort of assurance. "They're committing a huge amount of capital to the country, they need just some predictability as to how they will be treated [and] what the rules are," he says.

"It will depend on how they're drafted, but I presume that the guidelines in and of themselves will provide some certainty, so I think that's a step forward in making Canada a more favourable place for foreign investors," he adds.

Boscariol recognizes that it's a bit of a catch-22 situation in that having explicit guidelines on foreign takeovers reduces the government's discretion but, on the other hand, not having any guidelines deters foreign investment.

"Whenever government comes up with guidelines, to an extent they're handcuffing themselves — they're putting something out there, they're putting it in writing. So I can see why, from the government's point of view, it may make sense to be as flexible as possible; to retain as much opportunity as possible to treat different foreign investors differently," he says.

The Supreme Court of Canada has released its highly anticipated ruling in Canada v. GlaxoSmithKline Inc. with the pharmaceutical giant coming out a winner.

Although the court sided with GlaxoSmithKline, it is sending the case back to the Tax Court of Canada to determine a reasonable price. (Photo: Toby Melville/Reuters)

The top court was asked to determine whether GlaxoSmithKline was wrong to charge its Canadian subsidiary higher prices to avoid paying Canadian taxes.

This is the first time the SCC has addressed the rules on transfer pricing.

The ruling "may make it easier for foreign companies to dodge Canadian tax liabilities," Art Cockfield, a tax law expert and professor at Queen's University in Kingston, Ont., told Reuters.

Under transfer pricing, Canadian subsidiaries of foreign companies have to declare how much they pay their parent company for the products they import for sale. If they inflate the price paid for the products, the subsidiary can decrease its Canadian profits and pay less tax.

“That evil, if you will, has been around for a long time,” John Tobin, a partner at Torys LLP, told Law Times. “But in the last eight to 10 years, it has become a very large focus to what the Canada Revenue Agency is doing. They’ve beefed up their auditors and they’re quite concerned that Canada is losing its fair share of tax revenue by people miss-pricing what they’re doing between their related parties.”

The dispute goes back to the early 1990s when Glaxo Canada purchased ranitidine from Adechsa, a foreign affiliate, for between $1,512 and $1,651 per kilogram for sale in Canada under the trademark Zantac. Other generic drug makers purchased ranitidine for between $194 and $304 per kilogram from arm’s-length suppliers.

This caught the eye of the Canada Revenue Agency, which came to the conclusion that Glaxo was inflating its transfer price for ranitidine and reassessed the company for $51 million in unpaid taxes.

Glaxo appealed to the Tax Court of Canada, which dismissed the appeal, but the Federal Court of Appeal allowed it.

Today, the SCC dismissed the appeal and cross-appeal, ruling that it was appropriate for the Canadian subsidiary to pay more for pharmaceutical ingredients than a generic drug maker would pay due to the terms in its licence agreement with GlaxoSmithKline.

“Considering the licence and supply agreements together offers a realistic picture of the profits of Glaxo Canada,” SCC Justice Marshall Rothstein wrote on behalf of the bench.

“It cannot be irrelevant that Glaxo Canada’s function was primarily as a secondary manufacturer and marketer. It did not originate new products and the intellectual property rights associated with them. Nor did it undertake the investment and risk involved with originating new products. Nor did it have the other risks and investment costs which Glaxo Group undertook under the licence agreement. The prices paid by Glaxo Canada to Adechsa were a payment for a bundle of at least some rights and benefits under the licence agreement and product under the supply agreement.”

Although the court sided with GlaxoSmithKline, it is sending the case back to the Tax Court of Canada to determine what a reasonable price would have been for the Canadian subsidiary to pay.

The LPP, to be delivered by a third-party provider, would combine a skills-training component and a co-op work placement for a total of eight months. The report states that providers would be encouraged to find paid placements for candidates, but payment is not guaranteed as it is with most articling positions. The task force suggests that additional costs of the LPP should be distributed amongst all candidates, not just those who are taking it.

The current articling program would still be available, but with additional measures enforced.

The report also calls for a final assessment for all candidates — regardless of the option they choose — to test their practical skills before being licensed.

Four members of the task force, however, do not agree with these recommendations. Instead, they would like to get rid of articling altogether and have one licensing path for everyone via a two- or three-month transitional training program that would include online courses and exams to assess candidates’ knowledge of core competencies to being a lawyer.

The law society will be broadcasting a public webcast of the debate at Convocation on the articling task force report on Oct. 25 at 9:30 a.m.

The Supreme Court of Canada will hear seven appeals this week. Three of the cases relate to the rights of indirect purchasers (consumers) to sue companies for anti-competitive behaviour. Another case touches on a growing area of importance regarding access to private text messages.

Criminal law: Telus is seeking to quash a general warrant and assistance order, which required the company to produce copies of all text messages sent and received by two of its subscribers over a 14-day period. The police didn’t act in accordance with an authorization to intercept private communications. The motions judge upheld the general warrant except for the part requiring Telus to reproduce the text messages. The central issue in this case is whether general warrants can be used to seize the content of private text messages from telecommunication service providers.

Criminal law: In her absence, Nicole Rochon entrusted her property to her son who then grew marijuana on her land. Twice she asked him to remove the plants but she didn’t want to report him to the police. However, given her knowledge of the situation, she was obliged to report her son. At issue is whether complicity by omission requires a legal duty to act and if a person who has authority over another person or property fails to act can constitute actus reus.

Procedural law: Pro-Sys claimed that Microsoft violated the Competition Act and as a result, was able to charge higher prices for some of its products. Pro-Sys didn’t get its Microsoft products or software licences directly from Microsoft, but instead acquired them as “indirect purchasers” from re-sellers or “direct purchasers.” Pro-Sys accused Microsoft of intentional interference with economic interests and conspiracy, and claimed unjust enrichment and waiver of tort. Pro-Sys launched a class action lawsuit against Microsoft after it was granted by the B.C. Supreme Court, but the B.C. Court of Appeal reversed that ruling and dismissed the class action. The main question is whether indirect purchasers in Canada have any legal power when it comes to illegal and anti-competitive conduct. There is a sealing order in the case.

Procedural law: Sun-Rype sued Archer Daniels Midland, claiming it illegally engaged in a secret conspiracy to fix the price of high fructose corn syrup and then overcharged direct purchasers like Sun-Rype. The overcharge was then passed onto the consumers. The direct purchasers and consumers launched a class action against Archer Daniels Midland, which was granted by the B.C. Supreme Court. The B.C. Court of Appeal set aside the certification order for the consumers and remitted the direct purchasers’ application to the trial court. At the centre of this case is the corollary principle that bars customers’ claims and whether a constructive trust can be ordered if there is no direct link or proprietary nexus.

Civil procedure: In 2004, Samsung and other electronic manufacturing companies pleaded guilty in the United States to charges of conspiring to restrict competition in the sale of D-RAM. Direct purchasers and consumers tried to launch a class action lawsuit against the appellants for allegedly artificially inflating the price of D-RAM and other related devices. The Quebec Superior Court refused to authorize the class action but the Court of Appeal overturned this decision. The main issue is whether consumers in Quebec can sue to recover a price increase resulting from anti-competitive behaviour.

Immigration law: Muhsen Ahemed Ramadan Agraira is a Libyan citizen who came to Canada in 1997. He applied for convention refugee status based on his membership in the Libyan National Salvation Front but his application was denied due to lack of credibility. Agraira married a Canadian who sponsored his application for permanent residence but it was denied for security reasons. The legislation changed significantly during the time of his application and the minister of Public Safety and Emergency Preparedness became responsible for these decisions. Agraira filed an application for ministerial relief, but the minister refused. The Federal Court granted Agraira’s application for judicial review, however, the Federal Court of Appeal then reversed this ruling and dismissed his application. In question is whether the Federal Court of Appeal was wrong to find that a change in ministerial responsibility was the determinative factor in interpreting s. 34(2) of the IRPA and if the court unlawfully restrained the discretion of the minister by limiting the interpretation of “national interest” to issues of national security and public danger.

Criminal law: Charles Picot was acquitted on an indecent assault charge from 1975, partially because the complainant’s testimony wasn’t corroborated and wasn’t consistent with the evidence. The New Brunswick Court of Appeal allowed the appeal and ordered a new trial. The main question surrounds the trial judge’s decision to acquit Picot on the ground of reasonable doubt and if the judge’s failure to specifically consider testimony on incidental matters, which could have strengthened the complainant’s credibility, raises the question of law alone and gives the Attorney General the right to appeal.

Supreme Court Justice Morris Fish’s reasons became the dissenting decision after one of the judges switched sides to agree with Justice Michael Moldaver. That side then became the majority.

Moldaver agreed with much of Fish’s analysis but not with his decision to allow the appeal and grant a new trial.

Prokofiew and his co-accused Peter Solty were convicted of fraud and conspiracy to defraud the government of Canada of $3.25 million by manipulating the GST and HST system in the sale of non-existent heavy equipment.

At issue was whether Prokofiew was involved in the transactions and, if so, whether he knew they were fraudulent. At trial, Prokofiew exercised his right to silence by opting not to testify. Solty’s counsel implied to the jury that Prokofiew’s silence was evidence of his guilt. Prokofiew’s lawyer, Russell Silverstein, argued that the trial judge, Ontario Superior Court Justice David Corbett, should have instructed the jury not to use Prokofiew’s silence as an indication of his guilt and that failing to do so violated his right to a fair trial.

Corbett ruled that s. 4(6) of the Canada Evidence Act prohibited him from charging the jury on this issue.

In his reasons, Moldaver said that he was satisfied with Corbett’s instructions. “[W]hile I agree that an explicit remedial instruction from the trial judge would have been preferable — and would have been warranted in these circumstances — I am satisfied that the instructions that were given in the instant case, when considered as a whole, were adequate,” he wrote.

“I am confident that the jury would have understood, in the context of the entirety of the instructions, that the Crown could prove Mr. Prokofiew’s guilt only on the evidence and, as Mr. Prokofiew’s silence at trial did not constitute evidence, it could not be used to prove his guilt.”

However, Fish argued there was a “gap” in the judge’s charge. “Here, the jurors were faced with conflicting comments by counsel that complicated — rather than complemented — the ‘gap’ in the judge’s charge. They were left to determine for themselves, with no assistance from the judge, the evidentiary and legal effect of Mr. Prokofiew’s failure to testify at trial,” he wrote.

“We have no basis for supposing that the jury understood, in the absence of an explicit instruction by the judge, which counsel had stated the law correctly. The jury had no informed reason to believe one lawyer rather than the other. The guiding hand of the trial judge was essential — and absent.”

Fish referenced the Supreme Court’s 1997 decision in R. v. Noble that recognized that the right to trial silence must include the right not to have it used as evidence of guilt.

“Trial judges must take care to ensure that the right to silence becomes neither a snare nor a delusion,” wrote Fish.

“To this end, whenever there is a ‘significant risk’ ― as the trial judge found in this case ― that the jury will otherwise treat the silence of the accused as evidence of guilt, an appropriate remedial direction ought to be given to the jury.”

Moldaver and Fish also both agreed that Corbett was wrong to assume that s. 4(6) of the Canada Evidence Act prohibited him from making any reference to Prokofiew’s failure to testify.

James Morton advises lawyers to consent to clients’ requests for assessment of their accounts. (Photo: Sandra Strangemore)

In a recent decision, the Ontario Court of Appeal upheld a client’s right to assess a lawyer’s account.

In McCarthy Tétrault LLP v. Guberman, McCarthys had represented immigration lawyer Joel Stephen Guberman in his divorce proceedings and later sued him for unpaid legal bills.

Guberman requested that the bills be assessed, claiming that his lawyer made several errors that caused him to suffer financially.

At issue was whether Guberman was entitled to have his lawyer’s accounts assessed. The Court of Appeal ruled in favour of Guberman.

“The right of a client to have a lawyer’s account assessed is an important one, not to be taken away except in compelling circumstances. As this court has stated, public confidence in the administration of justice requires the court to intervene where necessary to protect the client’s right to a fair procedure for the assessment of a solicitor’s bill,” the ruling stated.

James Morton, head of the litigation group at Steinberg Morton Hope & Israel LLP, says the key element in Guberman is that there is no time limit for assessment.

“The takeaway from this decision is that even after the one-month period when someone has a prima facie right to assess your account, the court will almost always permit the client to assess a lawyer’s account,” he says.

As a result, Morton advises lawyers to consent to clients’ requests for assessment of their accounts.

The decision delivers a bit of a blow to lawyers since clients can now assess accounts from years prior and then lawyers have to spend the time — unpaid — defending accounts that they may not have a strong recollection of, says Morton.

But the court seemed more concerned about the public’s confidence in the administration of justice than the hassle it may cause for lawyers.

“The courts have said here and in other cases . . . that the public needs to be confident that lawyers’ bills are fair and proper, and are subject to review by the courts,” says Morton.